Module 11: Costing policy options using the Rapid Assessment Protocol ILO, 2013.
-
Upload
damon-oconnor -
Category
Documents
-
view
218 -
download
0
Transcript of Module 11: Costing policy options using the Rapid Assessment Protocol ILO, 2013.
Module 11: Costing policy options using the Rapid Assessment Protocol
ILO, 2013
Key questions
• What are the different cost projection tools used by the ILO?• What is the role of the RAP model?• What is the structure of the RAP model?• What are the different steps in using the RAP model?• What are the possible sources of data?• What are the advantages and limitations of the RAP model?
ILO’s costing toolsILO/FACTS: ILO’s Financial, Actuarial and Statistical branch• Actuarial valuations of social security schemes• In-house actuarial expertise and model developmentILO Social Budget Model (1990’s)• Comprehensive modelling of social expenditure• Several modules for projecting data• Tedious to use and requires experienced userRapid Assessment Protocol (RAP)• Built on the Social Budget Model• Compact (1 Excel file), flexible and easy-to-use• Allows for ‘rapid’ costing of SPF benefits
ABND FACTSHEETStep 1 – Building the assessment matrix including the identification of priority recommendations
Step 2 – Rapid Assessment Protocol to estimate the cost of implementing the social protection provisions
Step 3 – Finalisation of the assessment report for endorsement and further action by the higher levels of government
Steps of ABND
ABND FACTSHEETStep 1 – Building the assessment matrix including the identification of priority recommendations
Step 2 – Rapid Assessment Protocol to estimate the cost of implementing the social protection provisions
Step 3 – Finalisation of the assessment report for endorsement and further action by the higher levels of government
Second step of ABND
Labour market (EAP)
Demographic data (POP)
Macroeconomic data (ECO)
General government operations (GGO)
Costing of benefits
Summary and results
1. Input data
2. Estimated cost of benefits in absolute terms, as % of GDP, and as % of government expenditure
3. Projected cost of combined benefit packages
Structure of RAP
POP
AR
EAP ECO GGO(SQ)
BS 1 BS 2 BS 3 BS 4 BS 5
3. Summary of benefit costs
SUM
1. Input worksheets
2. Benefit worksheets to estimate the cost of scenarios
Structure of RAP
Coresia RAP: ‘Population’
Coresia RAP: ‘Economically Active Population’
Coresia RAP: ‘Economic’
Coresia RAP: ‘General Government Operations’
Number of people in the target groupx(Cost of benefits per head+Administrative cost per head)
Cost of implementing benefits
=
Using the RAP
Parameter What we have What we need to knowBenefit amount Current benefit level
according to the programme design
Future benefit level based on inflation, wage increase, etc.
Target population
Current number of people in the target group
Future number of people in the target group based on general population growth, growth projections for specific groups
Coverage of the target group
Current coverage of potential beneficiaries
Extension of beneficiary coverage depending on take-up rate
Cost of extending benefits
Current cost calculated using the parameters above
Estimated future cost in absolute numbers, as % of GDP, as % of government expenditure based on GDP growth rate, forecasted government expenditure
Using the RAP
• Affordability of the proposed scenarios and their impact on the fiscal space can be assessed
• The additional expenditures may be financed by workers’ and employers’ contributions, government budget
• Preliminary fiscal space analysis is conducted by comparing the cost of the scenarios with GDP and adding the cost to government expenditures - in the GGO(Benefits) worksheet
• Fiscal space can be created by raising or introducing taxes, borrowing from international institutions or markets, cutting down on low-priority expenses
Using the RAP
Scenario 1: Non-contributory pension for disabled in Indonesia
2012
Benefit cost= (30 x 12) x 200,000 x 20%= US$14,400,000
Admin cost = 15% x 14,400,000 = US$2,160,000
Total cost = US$16,560,000
Benefits
Target group
Coverage
Admin cost
US$30/month
200,000
20%
15%
2013US$31.5/month
202,400
30%
15%
Inflation: 5%
Pop growth: 1.2%
Take-up rate: 10%
Admin cost same
Benefit cost= (31.5x12) x 202,400 x 30%= US$22,952,160
Admin cost = 15% x 22,952,160 = US$3,442,824
Total cost = US$26,394,984
Using the RAP
Scenario 1: Non-contributory pension for disabled in Indonesia
Total cost as % of GDP= US$16,560,000/641 billion= 0.003%
Total cost as % of govt. exp.= US$16,560,000/113 billion= 0.015%
Total cost
GDP
Governmentexpenditure
US$16,560,000
US$641 billion
US$113 billion
US$26,394,984
US$721 billion
US$138 billion
RAP calculation
Projection
Projection
Total cost as % of GDP= US$26,394,984/721 billion= 0.004%
Total cost as % of govt. exp.= US$26,394,984/138 billion= 0.019%
Using the RAP
20132012
Presenting the results of RAPCost (as a percentage of GDP) of low and high scenarios in Cambodia
Presenting the results of RAPCost (as a percentage of GDP) of low and high scenarios in Indonesia
Presenting the results of RAPCost (as a percentage of GDP) of low and high scenarios in Thailand
Presenting the results of RAPCost (as a percentage of GDP) of low and high scenarios in Viet Nam
• national statistical offices• census and surveys• social security institutions and line ministries
ministry of planning: GDP and population projectionsministry of interior: registration for social benefitsministry of commerce: inflationministry of finance: budget, economic indicators
• central banks• research institutes, universities• UN/ILO population models, IMF’s World Economic Outlook
(alternative data sources)
Sources of data
• RAP can illustrate different policy options and provide a tangible basis to initiate and facilitate national dialogue
• Long-term sustainability of the programme can be checked by comparing the cost of implementation with economic indicators like GDP and government expenditure
• Results are simplistic and indicative
• Further detailed and actuarial studies are needed before designing a scheme
Advantages and limitations of RAP